Safety net catches middle class more often than the poor

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By Binyamin Appelbaum and Robert Gebeloff
New York Times
February 12, 2012

LINDSTROM, Minn. - Ki Gulbranson owns a logo apparel shop, deals in jewelry on the side, and referees youth soccer games. He makes about $39,000 a year and wants you to know that he does not need any help from the federal government.

He says that too many Americans lean on taxpayers rather than living within their means. He supports politicians who promise to cut government spending. In 2010, he printed T-shirts for the Tea Party campaign of a neighbor, Chip Cravaack, who ousted this region’s long-serving Democratic congressman.

Yet this year, as in each of the last three years, Gulbranson, 57, is counting on a payment of several thousand dollars from the federal government, a subsidy for working families called the earned income tax credit. He has signed up his three school-age children to eat free breakfast and lunch at federal expense. And Medicare paid for his mother, 88, to have hip surgery twice.

There is little poverty here in Chisago County, northeast of Minneapolis, where cheap housing for commuters is gradually replacing farmland. But Gulbranson and many other residents who describe themselves as self-sufficient members of the US middle class and as opponents of government largess are drawing more deeply on that government with each passing year.

Dozens of benefits programs provided an average of $6,583 for each man, woman, and child in the county in 2009, a 69 percent increase from 2000 after adjusting for inflation. In Chisago, and across the nation, the government now provides almost $1 in benefits for every $4 in other income. Older people get most of the benefits, primarily through Social Security and Medicare, but aid for the rest of the population has increased about as quickly through programs for the disabled, the unemployed, veterans, and children.

The government safety net was created to keep Americans from abject poverty, but the poorest households no longer receive a majority of government benefits. A secondary mission has gradually become primary: maintaining the middle class from childhood through retirement. The share of benefits flowing to the least affluent households, the bottom fifth, has declined from 54 percent in 1979 to 36 percent in 2007, according to a Congressional Budget Office analysis published last year.

And as more middle-class families like the Gulbransons land in the safety net in Chisago and similar communities, anger at the government has increased alongside. Many people say they are angry because the government is wasting money and giving money to people who do not deserve it. But more than that, they say they want to reduce the role of government in their own lives. They are frustrated that they need help, feel guilty for taking it, and resent the government for providing it. They say they want less help for themselves; less help in caring for relatives; less assistance when they reach old age.

The poorest households no longer receive a majority of benefits.

The problem by now is familiar. Politicians have expanded the safety net without a commensurate increase in revenues, a primary reason for the government’s annual deficits and growing debt. In 2000, federal and state governments spent about 37 cents on the safety net from every dollar in revenue, according to a New York Times analysis. A decade later, after one Medicare expansion, two recessions, and three rounds of tax cuts, spending on the safety net consumed nearly 66 cents of every dollar of revenue.

The recent recession increased dependence on government, and stronger economic growth would reduce demand for programs like unemployment benefits. But the long-term trend is clear. Over the next 25 years, as the population ages and medical costs climb, the budget office projects that benefits programs will grow faster than any other part of government, driving the federal debt to dangerous heights. Americans are divided about the way forward. Seventy percent of respondents to a recent New York Times poll said the government should raise taxes; 56 percent supported cuts in Medicare and Social Security; 44 percent favored both.

“How do you tell someone that you deserve to have heart surgery and you can’t?’’ Gulbranson said.

He paused. “You have to help and have compassion as a people, because otherwise you have no society, but financially you can’t destroy yourself. And that is what we’re doing.’’

Few federal programs are more popular than Medicare, which along with Social Security assures a minimum quality of life for older Americans.

None are more central to the nation’s financial problems. The Congressional Budget Office projects that government spending on medical benefits, even taking into account the cost containment measures in the 2010 health care law, will rise 60 percent over the next decade. Then it will start rising even more quickly. The cost of caring for each beneficiary continues to increase, and the government projects that Medicare enrollment will grow by roughly one-third as baby boomers enter old age. Spending on medical benefits will account for a larger share of the projected increase in the federal budget over the next decade than any other kind of spending except interest payments on the federal debt.

But many older residents in Chisago say this problem belongs to younger generations. They paid what they were told; they want to collect what they were promised.

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